Gold consolidates modest losses, holds around $1550

• Yellow metal heads for daily loss keeps familiar range. 
• Risk appetite, higher US yields weighed on XAU/USD. 

Gold prices dropped on Monday, on a quiet day for global markets. Price tested levels above $1560 but failed to hold and dropped to as low at $1546 before stabilizing around $1550. 

Eyes on US-China deal 

The improvement in risk sentiment weakened the demand for gold. Among currencies the yen was also hit. Higher US yields also contributed to the decline in gold and JPY. The Swiss franc outperformed despite the environment. 

Trade headlines are behind the optimism. The Chinese delegation led by Vice Premier Liu He just arrived in the US to sign the Phase One trade deal probably on Wednesday. On the data front, the next relevant economic report is US CPI due on Tuesday. 

Technical outlook 

XAU/USD is moving in a consolidation range, between $1540 and $1560. It dropped to the mentioned area after hitting multi-year highs above $1600 last week. The retreat could continue if gold breaks under $1540. The next strong support area might be seen at $1520/25 (horizontal level and the 20-day moving average). 

The dominant trend still points to the upside but it has lost momentum over the last sessions. A firm recovery in XAU/USD above $1560 could signal more gains ahead. The next resistance is seen at $1575.